HB 

547 



A FEW PRACTICAL COMMENTS 



USURY LAW, 



BY 



JOHN WELSH, 

President of the Philadelphia Board of Trade. 



READ BEFORE THE BOARD AT A QUARTERLY MEET- 
ING, JUNE 1 6, 1873. 



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PHILADELPHIA : 

M'CALLA & STATELY, PEINTEBS, 237-9 DOCK STREET, 

1873. 




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Book. 



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A FEW PRACTICAL COMMENTS 



USURY LAW, 



JOHN WELSH, 



President of the Philadelphia Board of T?'ade. 



READ BEFORE THE BOARD AT A QUARTERLY MEET- 
ING, JUNE 1 6, 1873. 



PHILADELPHIA : 
M'CALLA * STAVELT, PRINTERS, 237-9 DOCK STREET, 

1873. 




^iK 






Rooms of the Philadelphia Board of Trade, 
Jicne i6th, 1873. 

At a meeting of the Board of Trade held this evening, 
a paper on the Usury Law was read by the President, 
Mr. John Welsh. After the reading, the following 
resolution, offered by John Price Wetherill, Esq., was 
adopted, viz. : 

That in view of the great interest now. felt on this subject, the Sec- 
retary is hereby requested to have the paper just read, printed in pam- 
phlet form, and distributed among the members of this Board. 

UL 



N\T. 3c\ 






Gentlemen : 

On the 19th (May) ult.,the following resolution was 
adopted by the Philadelphia Board of Trade : 

That in the opinion of this Board the following provision, as a 
part of the Amended Constitution of the State, would be generally- 
acceptable to the various btisiness interests it represents, viz. : 

The lawful terms for the use of money shall be the rates agreed 
upon by the parties to the contract, and for loans where no agi-ee- 
ment is made, the Legislature may from time to time affix a legal 
rate. 

This resolution met with general approval. In 
regard to it, there is very little difference of .ojDinion 
among the mechanics, manufacturers and merchants 
of the country. What measure of intelligence there 
is among them and how capable they are to reach a 
correct conclusion on this subject, others may deter- 
mine. Their pursuits, and the effect of existing 
laws which act as a hindrance to their daily opera- 
tions, make it reasonable that practically they are 
as well qualified as any other class to form reli- 
able opinions on the laws which regulate the use of 
money. The extent of their interests, and the im- 
portance of those interests in their bearing on the 
welfare of the community, as well as the respect to 
which these important classes are entitled, make 
their opinions, when deliberately expressed, well 
worthy of consideration by their fellow-citizens, and 
particularly by that class of them who have been 
selected to form a new Constitution for this Common- 
wealth. To that body the resolution recited above 



was addressed, that it might have its influence in 
the consideration of the following proposed article 
for the new Constitution. 

" In the absence of special contracts the legal rate of 
interest and discount shall be seven per cent, per 
annum ; but special contracts for higher or lower rates 
shall be lawful. All national and other banks of issue 
shall be restricted to the rate of seven per cent, per 
annum." 

In the Convention a debate of unusual interest fol- 
lowed the presentation of the article, and in opposition 
to it, Henrj C. Carey, Esq., of this city, made a most 
elaborate and able address. On his address I propose 
to make a few practical comments. 

Mr. Carey has few superiors as a profound thinker. 
He is a skillful controversialist, an experienced and 
polished writer, and enjoys a most extensive and well- 
deserved reputation. He is an economist whose teach- 
ings are in sympathy with the best interests of the 
country, and whose principles, shorn somewhat of the 
extremes to which he is apt to push them, are sustained 
by a large proportion of the members of the Philadel- 
phia Board of Trade. 

Mr. Carey was most earnest and emphatic in his 
denunciation of all attempts to repeal the usury law 
and to change the legal rate from 6 to 7 per cent., as 
provided for in the article under consideration. He 
expressed, as strongly as our language admits of it, 
the opinion, which from his aflfectionate and amiable 
disposition it seems impossible that he can hold, that 
the merchants, bankers, indeed all who desire its 
repeal, are "Shy locks, who would gladly take the 
pound of flesh nearest the heart." In Shy lock, how- 



ever, the love of money was subordinate to tlie love of 
blood. It WSLS, revenge for tlie wrongs done to him by 
Antonio which caused Shylock to whet his knife and 
get his scales in readiness for the pound of flesh nearest 
Antonio's heart. It is probable Mr. Carey, in his 
application of Shakspeare's language to us offenders, 
did not desire that it should receive so literal an inter- 
pretation. I must confess to great disappointment at 
the manner in which Mr. Carey has treated the subject. 
It was reasonable to expect from him a philosophical 
review of it, an explanation of what usury is, a state- 
men of the causes of the traditional prejudice which pre- 
vails against it, and a reason why the epithet usury is 
api^lied to the hire of money and not to the hire of 
anything else. Moses said, " thou shalt not give thy 
brother thy money on usury nor lend him thy victuals 
upon increase." Mr. Carey may not consider the latter 
an infraction of the law, although Moses did ; but with 
Moses the prohibition was against ani/ increase or hire 
if exacted from the jjoor Jew, but it did not apply if 
the loan was made to a Gentile. It is a matter of 
sincere regret that a gentleman whose studies so 
eminently lit him for it, did not avail himself of the 
opportunity to expose the principle on which "usury" 
is based. He may be satisfied to regard it as an in- 
fraction of a statute, but that will not answer the 
inquiry why it is an offense dependent on arbitrary 
statutes defined by geographical lines ; nor explain the 
reason why the code of morals of ISTew Jersey, Ohio, 
!N"ew York and Pennsylvania — States lying contiguous 
— are so radically different from each other, in that 
one bases it on 6 per cent., another on 7 per cent., and 
another on 8 per cent. There is no explanation 



6 

of it, as there is of the law which authorized 
slavery, where the color of the skin, the conformation 
of the skull, and the adaptation to peculiar kinds of 
labor and climate controlled the inductions of the 
physiologist, and ancient usages, handed down through 
the traditions of successive ages, combined with them 
to fasten upon a whole race so grievous a wrong. 

Unfortunately for the free exercise of Mr, Carey's 
mind on this subject he looks on the effort for the ab- 
rogation of the usury law as a movement against the 
system of protection and the existence of paper money. 
In his study, away from any practical connection with 
the movements of money, dependent for all that he 
learns on statistical tables, reports &c., it is that his 
thoughts take shape, and therefore when he comes forth 
from it he may well be startled by the pungent truths 
embodied in the forcible words of Mr. Edward C. 
Knight and Col. John Price Wetherill, who followed 
him so ably in the debate — gentlemen whose expe- 
rience has brought them to just conclusions and led 
them to know that the usury law is a mere sham, 
without other force than to increase the cost of money 
to the borrower, who may lawfully, by indirection, do 
that which the law forbids to be done directly. It was 
shown by these gentlemen beyond dispute that the 
Legislature, with the Usury Statute staring it in the 
face, had authorized almost every variety of Corpora- 
tions including Banks, Railroad Companies, Mining 
and Manufacturing Companies to borrow and to loan 
money at any rate of interest. Is there any principle 
involved in the usury law if corporations are exempt 
from it and individuals are not ? and the question be- 
comes even less doubtful when, by the intervention of 



a third party, individuals, also, are thrown by law 
beyond its pale? ^Notwithstanding the law against 
usury which is a prohibition to loan money at a rate 
beyond six per cent., in accordance with special law, 
corporations and individuals may loan or borrow at 
any rate they please. 

Mr. Carey dwelt much on the evil consequences 
which will follow the repeal of the law, and pictured 
the distress caused by its repeal in England and else- 
where. If the law is virtually inoperative here, as it 
certainly is, then the consequences of the repeal are 
anticijDated, and we are now amidst the irretrievable 
ruin he predicts, as unconscious of it ourselves as it is 
unobserved by others. It is not complained that the 
etfects of the law are burdens too heavy to be borne, but 
rather that the law is not in accord with the intel- 
ligence of the day ; that it entails on the borrower 
an unnecessary additional cost from the necessity of 
employing a third party ; that its existence on the 
statute book is an oifense to the moralist and states- 
man as a law false in principle, based on n traditional 
prejudice and shown to be so by other laws justifying 
that which it condemns ; and that it denies to the 
laborer of Pennsylvania the intelligence to determine 
for himself whether be can afford to borrow capital on 
the same terms as his fellow laborers of JSTew Jerse}", 
IsTew York and Ohio. Its repeal will not bring a mil- 
lennium, much less need one fear the sad consequences 
which Mr. Carey has learned that England is suffering 
from because of it. In regard to this, stated by him 
as a fact, possibly he has been misled by some one who 
has practised on his credulity, or from his standpoint 
— ^his study — he sees it through books colored by the 



ghastly hue of a system of political economy differing 
from his own. My outlook is through the busy avenues 
of commerce and industry, which bring before me a 
picture of England as she is now, possessed of more 
material wealth than ever before, with all the currents 
of the world's commerce tributary to her. I do not 
ascribe her condition to the repeal of the usury law, 
but her condition shows that its repeal has not checked 
her onward progress. I do not claim that the repeal 
of the usury law will be magical in the production of 
wealth, but that its continuance has no favorable effect 
on labor, is no protection against the so-called tyranny 
of capital, is abhorrent to common sense, which, because 
legal modes are provided for its avoidance, has long 
since determined it to be an absurdity. 

Mr. Carey, as an economist, well understands the law 
of supply and demand, and its influence on values, and 
yet he asserts "that the reduction in the rate of interest 
indicates a growing power of labor over capital." He 
quotes from Turgot to support this position: "It is the 
abundance of capital that animates to effort, and the 
low rate of interest is at once the effect and the indica- 
tion of that abundance." Instead of the latter being in 
support of Mr. Carey's position, Turgot says that when 
there is a superabundance of capital it is the stimulant 
of labor ; in other words, when the supply of money is 
cheap those who can avail themselves of the opportun- 
ity, buy it. It is like any other article of commerce. 
The relation between capital and labor is intimate, and . 
when it is in its normal condition it is reciprocal. An 
equipoise in the supply of both indicates the happiest 
condition of that relation. When labor is in profitable 
employment it is that the value of capital enhances 



9 

and ill proportion to the profit resulting from labor is 
the increase of the hire of money. When the sinews 
of labor are in repose money has but little value. 
Therefore the reduction in the rate of interest is most 
apt to be caused by the paralysis of labor, and conse- 
quently it is not expressing its true condition to speak 
of the reduction of interest as indicating a growing 
power of labor over capital. 

Mr. Carey speaks of money as a commodity, and 
says " that year after year we see some half a dozen 
men in the Bank of England combining for raising the 
price of the commodity they have to sell." This state- 
ment is suggestive of the question, if money be a com- 
modity, which Mr. Carey calls it, and in this I agree 
with him, then why is it the only commodity which 
the law says shall be sold at a fixed price ? It is true 
that in one respect money difi'ers from other commodi- 
ties, in that it has a purchasing power and a paying 
power. The paying power is fixed ; that power is a 
creation of law ; the purchasing power is changing, 
subject to the supply and the demand. Between it and 
other commodities, so far as the paying power is con- 
cerned, there is no resemblance, inasmuch as on no 
other commodity is that power conferred by existing 
laws, and therefore a commodity cannot be legally used 
in payment of debt ; but in its purchasing power it is 
precisely similar to other commodities. Five dollars 
may to-day buy a barrel of flour or a barrel of flour 
may purchase five dollars, but to-morrow their relations 
may be changed, depending on the excess or diminu- 
tion in the supyjly of either. So that exclusive of its 
paying power money is precisely likeother commodities. 

But the statement as made by Mr. Carey, conveys 



10 

a very incorrect view of the eiiect produced by the 
action of the Bank of England " in raising the price 
of the commodity it has to sell." To raise the rate of 
discount or the price of money is not for the purpose 
of increasing the profits, but for the very opposite pur- 
pose of checking the loans, and by reserving the re- 
ceipts to strengthen the position of the Bank. When- 
ever there is an indication of a probable disturbance from 
excess of speculation at home or abroad, or any other 
cause likely to afl'ect injuriously the material interests 
of England, the Bank rate is advanced to an extent 
which in the judgment of the men in the Bank Parlor 
ma}^ be necessary. Low interest is an indication of 
tranquillity in financial movements, high interest of a 
real or threatened disturbance. The variations in the 
rate are useful admonitions from a central command- 
ing point for the government of the commerce of Eng- 
land, and they are largely influential in the commercial 
and monetary movements of the world. The daily re- 
ports from the Signal Oflice in Washington, as to the 
weather, known as "probabilities," which so largely 
contribute to the public convenience, are an apt illustra- 
tion of the benefit conferred by the announcement of 
the changes in the rate of the Bank of England. 

One of the curious features throughout Mr. Carey's 
argument against the repeal of the usury law, is 
that the element of hazard, has no place in it, and 
yet its influence on the rates of interest or hire of 
money is of the greatest weight. Usury in Pennsyl- 
vania, it will be borne in mind, is any charge in excess 
of 6 per cent., irrespective of the character of the loan 
or of the security which accompanies it. Loans are 
made on personal and real security, and both equally 



11 

cany the responsibility of the borrower. Many personal 
loans are made on the name of the borrower, others 
on those of the borrower and endorser, to others, in 
addition to the names of borrowers, are added collat- 
erals of United States loans. State loans, City loans. 
Corporation loans. Stocks, &c., whilst loans on real se- 
curity carry the names of the borrower with a mort- 
gage on real property. For all these classes of loans 
irrespective of the character and means of the borrow- 
ers or the estimation in which the securities are held, 
the law prescribes one rate of interest, and this Mr. 
Carey says is wise and just. ]Lsrotwithstanding this if 
a trustee invest in either of four-fifths of the loans 
which are recognized as those of every day transac- 
tions, the law holds the trustee responsible for the 
hazard. Mr. Carey must know, as all practical men 
know, by experience, that the value of money must be 
measured by the hazard to which its use is exposed, 
and that the rate of its hire has been, is now, and must 
continue to be governed by that principle. The high- 
est class of security will command a loan at the lowest 
rate of interest. This point being settled by usage, 
shows that no respect is paid to the usury law. But 
Mr. Carey has great anxiety lest the borrowers on mort- 
gage should become a prey to the lenders of money. 
The rate of interest is dependent on two things, the 
supplj'- of money and the sufficiency of the security. 
Of all kinds of security land is the most stable. It can 
neither be removed nor destroyed. Of all classes of 
people lenders of money are the most timid. But a 
small proportion of them in numbers will lend upon 
any other security than land valued at double the 
amount loaned. Mortgages are by law a legal invest- 



12 

ment. These two are reliable causes for a permanent 
demand for choice mortgages at rates below the cur- 
rent price of loans on less approved security. Very 
many mortgages are sold in Pennsylvania which yield 
to the lender of money from 7 to 12 per cent, per an- 
num, bat the rate for most mortgages is 6 per cent, 
and some are at 5 per cent. As a rule the usury law 
has no influence on negotiations for borrowing money 
on mortgages, although there is a small class of lenders 
who, from conscientious motives, avoid even the ap- 
pearance of an infi-action of the law, but this class with- 
out exception belongs to a much larger class who lend 
money at low rates because they look mainly to the 
sufficiency of the security. Agriculturalists who are 
borrowers, borrow on land, and a,griculturalist8 w^ho 
are lenders, lend upon land, and with all the fluctua- 
tions in the value of money from causes which are na- 
tural and based on sound principles, and must always 
be operative, mortgages on land will continue to be, as 
they now are, a favorite security. 

Mr. Carey says " that combinations are being every- 
where formed for raising the price of money, that the 
long loans of the past are being superseded by the call 
loans of the present ; that the manufacturer and mer- 
chant are being more and more fleeced by Shylocks," 
&c.; and "this," he says, "is because the Treasury oper- 
ations have tended in the direction of the money 
lender." He does not show the character of these 
Treasury operations, nor how these sad efiiects are. 
brought about ; nor does he seem to have studied what 
he believes to be their consequences so as to be able to 
expose their causes. The enlarged commercial facili- 
ties of the present day, the extension of the fields of 



13 

operations, the ease with which those fields are trav- 
ersed, the varieties of property represented by the in- 
numerable successful enterprises which the last twenty 
years have given rise to, whilst they have largely in- 
creased and widely diffused the wealth of the world, 
have also tended to the concentration of individual 
wealth both in Europe and the United States. At no 
previous period in modern times have there been so 
many examples of overgrown fortunes, and in most 
instances their individual possessors have gained their 
wealth by exceptional force of will or intellect and 
often of both. It is as unreasonable to expect moral 
perfection in this phase of genius as in a Napoleon. A 
victory in old Broad Street or on Wall Street is as 
alluring as on the fields of Jena and of Austerlitz, and 
we shall continue to have in every field where genius 
can have its play, in one shape or another, occurrences 
which will both startle and disturb. When volcanoes 
cease or the lion and the lamb lie down together such 
disturbances will be at an end. 

That long loans have been superseded by short loans, 
as Mr. Carey represents that they now are, is a most extra- 
ordinary delusion. In the last ten years more long 
loans have been negotiated than in any known previous 
period. That period compasses the vast loans of the 
United States and of France. 'No State, city, county, or 
borough, in the United States has failed during it to 
get what it wanted, and their wants have not been lim- 
ited. The raiload companies of this country alone 
owe twelve hundred millions, or thereabouts ; one 
company is now creating a loan for forty millions. It is 
difficult to sum up the total amount of long loans which 
have been made in that time, and yet Mr. Carey says : 



14 

" the long loans of the past are being daily more and 
more superseded by the caU loans of the present ;" and 
again he says, " The whole tendency of the existing 
system is in the direction of annihilating the disposi- 
tion for making those permanent loans of money by 
means of which the people of other countries are 
enabled to carry into efiect operations tending to secure 
to themselves control of the world's commerce. Under 
that system there is, and there can be, none of that 
stability in the price of money required for carrying 
out such operations." Absorbed in his abstruse studies, 
he knows but little of what is really going on. His 
theory builds up his facts, and the work is so beauti- 
fully done by him, that the eye rests only on the su- 
perstructure. 

Mr. Carey has a tender heart. It is deeply moved 
with sympathy for "the manufacturers and merchants 
who are more than fleeced by Shylocks, who would 
gladly take the pound of flesh nearest the heart." One 
is melted to tears by his recital of their suiferings. 
How and when do these sad things occur, that only 
Mr. Carey hears of them ? There always have been and 
always will be individual cases of misfortune worthy 
of men's sympathy, but at no previous period have 
these classes of the community, enjoyed more general 
prosperity. l^Tor if one enters the sphere of manual 
labor exclusively, and takes into view that class which 
Mr. Carey has always had very near to his heart, can 
there be found any indications but those of unusual 
prosperity. There is abundance of employment and at 
full wages. How the repeal of the usury law can inju- 
riously afliect labor, I cannot imagine. It is practi- 
cally null, and may be legally avoided. Those who 



15 

work with their hands, are most to be benefited by 
the rapid circulation of nioney, and every hindrance to 
that circulation, in whatever shape it may be, operates 
to their disadvantage. 

Mr. Care}^ says: "the tendency of the precious metals 
is towards those countries where interest is low, and 
from those where interest is high." He might have 
said that accumulated capital draws to it its own 
earnings, and with the increase of its supply beyond 
the demand for it, the price of its hire declines. If 
low rates of interest indicate a growing power of labor 
over capital, as Mr. Carey says it does, then we find that 
growing power in England, where interest is low, and 
where Mr. Carey believes that capital lords it over labor 
more than in any other part of the world. 

All the evils which theologians ascribe to the fall 
of man, Mr. Carey attributes to "the sad blunders 
of our great financiers." Already, he says, "sheriff's 
sales indicate widespread distress, and should this 
section be adopted, giving perfect freedom to the Sh}^- 
locks of the day, the next half-dozen years will wit- 
ness the transfer under the sheriff's hammer of the 
larger portion of the real property of both the City 
and the State. Of all the devices yet invented for the 
subjugation of labor by capital, there is none that 
can claim to be entitled to take precedence of that 
which has been now proposed for our consideration." 
With what prophetic sadness this is uttered ! Its tone 
is as earnest as if it were that of inspiration. Coming 
from lips so matured by reflection and study, how can 
one disregard it ? Practical experience will, however, 
override theoretical predictions, and scoffer as one may 
be called, Mr. Carey is pointed to the States of New 



16 

Jersey, l^ew York and Ohio, where no evidence of ruin 
is to be found, although seven percent, and upwards are 
the legal rates of interest, and to all of them as well as to 
Pennsylvania, where the usages of borrowing and lend- 
ing virtually abrogate the usury law. The widespread 
distress, which Mr. Carey speaks of, is purely ideal. 

Mr Carey, says that in 1859, Mr. Edward Everett 
estimated the purely personal debt of the country apart 
from that of trade, manufactures, or agriculture, at 
fifteen hundred millions of dollars, and described it as a 
"■ mountain load, more deadly than fever and plague, 
more destructive than the frosts of Spring, or the 
blights of Sammer," and yet Mr. Carey thinks " Mr. 
Everett failed to appreciate to even a tithe of its real 
extent the power thereby given to capital, in its con- 
test with labor." What this purely personal debt was, 
neither Mr. Everett nor Mr. Carey explains. It was, 
however, a debt, whatever its character, with very 
disagreeable consequences. Mr. Carey then says : 

" Every one who parts with property, payment for 
which is to be made at some future time, by so doing 
constitutes himself a money-lender to the extent of the 
amount whose payment is thus postponed. If the 
property be purely personal, he adds to what would 
otherwise be the price so much as w^ill cover the charge 
for the time and for the risk to be incurred. The 
borrower being regarded as a thoroughly responsible 
man, the interest thus charged may not exceed ten or 
twelve per cent, per annum ; but passing downward in 
the societary scale, the charge rises in the direct ratio 
of the poverty of the party borrowing, until at length 
we find the very poor and the very weak, paying in- 
terest at the rate of sixty, eighty, a hundred, and per- 



17 

haps even, as now in England, almost five hundred per 
cent." 

This is Mr. Carey's explanation of the process by 
which a dealer becomes a money-lender. It is not 
diificult for him to draw any class into his service 
when he needs that service. From the largest dealer 
to him who scores his charge on the bar-room door, 
with the sum of all their sales with interest added, he 
has them at his command, and by a breath converts 
them into lenders of money. But does he not 
practise a species of inhumanity of which he should be 
ashamed in this transformation of the honest dealer 
into a money-lender — a Shy lock? Having now shown 
who are the lenders of money, the next step is 
to create the borrowers and' the amount borrowed. 
These obscure facts are reached by a summary process. 
Sixteen millions of people in the United States, Mr. 
Garey says, are capable of contracting debts. We find 
that number to be one-half of the then population, and 
that investigators have ascertained that one-half of 
the whole population ordinarily is under and one-half 
over twenty-one years of age. The latter constitute 
Mr. Carey's subjects ; nineteen-twentieths of whom he 
believes were really in debt, that is 15,200,000 out of 
16,000,000, and that they were paying interest on 
their debts at from 10 to 200 per cent., and the total 
debt he assumes as greatly exceeding two thousand 
millions. 

Thus Mr. Carey, on exclusively speculative data., ^proves 
that at the outbreak of the war there was a personal 
debt, not so pure probably as that spoken of by Mr. 
Everett, for Mr. Everett does not speak of the excessive 
interest his debt was bearing, whilst Mr. Carey assumes 



18 

that his two thousand millions were bearing from 10 
to 200 per cent. If one takes the average rate of in- 
terest, saj at 100 per cent., the annual payment for in- 
terest alone is two thousand millions. The ability to 
pay so much annually proves that the debt was based 
on a large previously acQ[uired property or the immense 
productiveness of labor in the use of the capital bor- 
rowed. Another observation may with propriety be 
made here, that this large mountain of debt produced 
neither fever, plague, frost, nor blight, as at that time 
there was no apparent distress, emigration was flowing 
into the country, the husbandman was well rewarded 
and industry found everywhere profitable emplojmient. 
To illustrate his point, however, Mr. Carey converts 
this debt into notes of hand, and then represents it as 
" two thousand millions of uncurrent money, as per- 
fectly dead so far as regarded all performance of ex- 
changes, as if it had been buried in the earth." Why, 
was this conversion into notes of hand needed ? Only 
to serve Mr. Carey's peculiar mode of argument, for 
as currency it was useless in its original form, and it 
was equally useless after its form was changed. In 
consequence of this buried currency, Mr. Carey says, 
" that in the first year of the war the societary move- 
ment was paralysed to a degree greatly exceeding any- 
thing the country had ever before known." When he 
has a theoretic point to make, Mr. Carey seems to 
regard the war as a mere circumstance, unequal to any 
serious consequences as a disturber. Who else could 
draw the conclusion he has here stated ? That a war, 
which no one believed could occur because it was 
so unnatural, should have startled a nation ; that when 
it did occur, and our fields full of promise for the bar- 



19 

vest were trodden by hostile armies and soaked in 
fratricidal blood, and our homes were sending forth 
their fathers and sons in defense.of their dearest rights ; 
was it other than a natural consequence that all the 
ordinary pursuits ceased, and all the instruments of 
commerce and of every industry were paralysed ? It 
was the war and not the burial of Mr. Carey's imaginary 
uncurrent currency which produced the paralysis. Such 
consequences had a real, not an imaginary, cause. 

The paralysis was temporary. As soon as our con- 
dition was realized by the Government and the people, 
every instrumentality the nation possessed was put in 
action, as well as its army and its navy, and when the 
gold in its treasury was exhausted, its credit was used 
wisely and to great advantage in the $400,000,000 
spoken of by Mr Carey. He calls it " live money, free 
of interest, which took the place of thousands of 
millions of dead money, for whose use our people had 
been paying interest at twice, thrice and even twenty 
times the legal rates." How it takes the place of 
money which was buried and was purely ideal before 
it was buried, Mr. Carey does not trouble himself to 
explain. But Mr. Carey certainly cannot believe that 
the two thousand millions were Mdped out by this 
process. He knows too well that unrelenting creditors, 
his Shylocks, cannot be paid by cither logic or rhetoric. 
Industry must have toiled, death have aided, and the 
bankrupt law done its part in cancelling that "moun- 
tain load ;" and further, he has told us so often in the 
course of his speech of existing distress, " caused by the 
sad blunder of our great financiers " and the " moun- 
tain loads of debt," that he will pardon me for saying to 
him that by a surer process than that by which he 



20 

established the existence of two thousand millions of 
debt then, he can make it fourfold that sum now. 
Without looking at debt in the gloomy light in which 
he has presented it, or speculating in the slightest 
degree upon its extent, one can sum up very -readily, 
as existing at the present moment, forty-five hundred 
millions, excluding all kinds but the debt of the United 
States, State, City and Railroad loans. The individual 
and business debt of the country is almost beyond 
computation, — the debts due the Banks alone being 
about nine hundred millions. What the purely per- 
sonal debt is, Mr. Carey may conjecture. But one should 
not delude one's self by a false estimate of what debt 
is. Debt is usually a representative of the realized or 
promised earnings of labor. In the shape of currency 
it is Mr. Carey's panacea for all diseases. To speak seri- 
ously, it is one of the most useful instruments of civilized 
man, and whilst this earth is the home of man its aid is 
not likely to be dispensed with. Like every other in- 
strument in the hand of man it may be made destruc- 
tive, but used as it should be, it is the promoter of 
industry and largely contributes to its rewards. 
Archbishop Whately with the power of his logic, 
proved conclusively that ISTapoleon never lived. Mr. 
Carey, in his logic, is less forcible but more ambitious. 

Mr. Carey's sympathies are with the borrowers 
of money. He has none for the lenders, and why 
one class should be treated with injustice, at least in 
his description of them, is quite inexplicable. If the 
products of industry bring more money than they used 
to do by natural causes, why should not the same 
causes be allowed to operate on the product of money ? 

Did Mr. Carey move about in the world as the 



21 

money of which he writes does, and come in contact 
with the lenders and borrowers, he would find them 
made of one blood and possessed of like passions. The 
tendency to extortion is no more a peculiarity of the 
money-lender than it is of the vender of merchandise, 
the landlord, or any other class of men. It is a vice ol 
humanity. 

I will delay you no longer. I have followed Mr. 
Carey far enough to show what appear to me to be 
some of his inconsistencies on the subject of the usury 
law. I believe that his views in regard to it are en- 
tirely attributable to the application he makes of the 
influence of this law on his theory of paper money 
and the system of protection. I close with an expres- 
sion of my own conviction, that the usury law is ad- 
verse to the best interests of the Commonwealth, and 
being so, that it operates unfavorably to the system of 
protection. 



